Category Archives: Companies

IF you can keep your head when all about you
Are losing theirs and blaming it on you,
If you can trust yourself when all men doubt you,
But make allowance for their doubting too;
If you can wait and not be tired by waiting,
Or being lied about, don't deal in lies,
Or being hated, don't give way to hating,
And yet don't look too good, nor talk too wise:

If you can dream - and not make dreams your master;
If you can think - and not make thoughts your aim;
If you can meet with Triumph and Disaster
And treat those two impostors just the same;
If you can bear to hear the truth you've spoken
Twisted by knaves to make a trap for fools,
Or watch the things you gave your life to, broken,
And stoop and build 'em up with worn-out tools:

If you can make one heap of all your winnings
And risk it on one turn of pitch-and-toss,
And lose, and start again at your beginnings
And never breathe a word about your loss;
If you can force your heart and nerve and sinew
To serve your turn long after they are gone,
And so hold on when there is nothing in you
Except the Will which says to them: 'Hold on!'

If you can talk with crowds and keep your virtue,
' Or walk with Kings - nor lose the common touch,
if neither foes nor loving friends can hurt you,
If all men count with you, but none too much;
If you can fill the unforgiving minute
With sixty seconds' worth of distance run,
Yours is the Earth and everything that's in it,
And - which is more - you'll be a Man, my son!

I've been involved in 6 layoffs, 3 on the delivery, 2 as a surviving employee and 1 on the receiving side. These included wildly successful companies before and after layoffs. There are common elements in big and small companies but small companies suffer more organizational trauma (those affected suffer the same trauma). This post is directed at small competitive company CEO's (<100 people).

First and foremost as the CEO you need to lead, be in the middle, present and available for all meetings with the affected, feel the pain, remorse and self-examine what you could have done better. This event will shape the company culture and it's capacity and capabilities going forward. Laying the bulk of the problem off on your leadership team is pansy, this is your station as the CEO.

Follow advice from people experienced in human resources e.g. safety during the event (police present), documentation, exit interviews, outplacement etc. but this isn't HR's job, as CEO you need to get the details right while keeping the big picture view to re-energize the company.

Here are my core principles:

Company

1) Future

The business outcome after the layoff is profoundly impacted by how well you managed these 2 issues:

1- Who's in the boat going forward? -Everyone is fair game in a small competitive company cut, seniority and past contributions are tie breakers, not policy. Friends and founders are the hardest to let go.

2- How deep did you cut? -Size for the worst realistic scenario by cutting deeper than you think. You get one shot for people to bounce back from the adversity, make it over... take the big hit now! Rolling layoffs = dead company.

2) Speed

- One bad day. Execute swiftly in a single day, plan every 15 minutes, communicate clearly to everyone involved... all eyes are on you.

3) Relief

- After the affected have left, communicate clearly that it is over. It's OK to be sad and grieve along with the company.

4) Repurpose

- You're smaller... take work off the table and refocus on core initiatives going forward.

People Affected

1) Them

- Tell them you're sad, it was absolutely necessary, it's not about them you'll miss them, but the decisions are final.

2) Compassion

- Be compassionate to everyone, this will ripple through their self-esteem, lives and family. Expect crying, anger and shock, possibly even violence and vengeance, treat with utmost respect.

3) Forward

- Describe how important it is for them to look forward to new beginnings but be the backbone that moves everyone along, thank them for their service and contributions.

4) Help

- Provide as much help, references, out-placement, severance etc. as you can. Employees will be watching, this is where the rubber meets the road for trust, what-you-say vs. what-you-do is in high definition regarding company values around people.

Employee's Remaining

1) Imperfect

- Make it clear you did your best, probably made mistakes, but after discussing with managers, you made the final decision for the people that were forced to leave. Take the responsibility hit from your managers because some employees might think the company picked wrong people, you're batman... you can handle it.

2) Over

- Time for an all hands meeting message: "... it's over, we planned for a worst case, you're secure ... questions?"

3) Sad

- Be sad the world's this way along with everyone else.

4) Focus

-Communicate clearly that this is not for nothing, you need their help. Re-energize by removing some work and focus the whole company on the critical challenges, be it sales, new products, customer retention etc. Ask for inputs on improvements, remind everyone that business is a marathon, not a sprint.

My worst experience was as a CEO during the 2000 tech bubble burst when I had to layoff over 1/3 of the company including founders and friends. Our VC' s had portfolio teams that curled up and sucked their thumb during those times, don't be one of those, they were pansy's and were canned.

Layoffs change all companies, from temporarily reducing morale to rewriting the "employee contract". Small companies don't have the "cultural momentum" large ones have, so they are always profoundly changed.

The best way to avoid layoffs is by making tough love business and people decisions everyday... especially when times are good.

Politicians spend their lives mastering it. Good BS'ers have practiced it for years. It's a great way to make people think you have "senior management potential".

Abstraction

the act of obtaining or removing something from a source : the act of abstracting something

a general idea or quality rather than an actual person, object, or event : an abstract idea or quality

the state of someone who is not paying attention to what is happening or being said : an abstracted state - from Mirriam-Webster

Back in the day I worked for a brilliant manager who had his team meet with 2 PhD psychologists regularly to practice the latest and greatest theories on effective behaviors and team building skills. During one session we read and worked over "Language in Thought and Action" by S.I. Hayakawa (a U.S. Senator). First published in 1949, it is considered a classic work on semantics.

My first takeaway was to recognize conversations moving from lower-to-higher or higher-to-lowerlevels of abstraction. This is critical when making decisions since it is usually easier to move up rather than down yet YOU CANNOT RESOLVE ANYTHING MOVING UP!

Consider making a decision about Betsy, the cow....

...we can talk about her contributions to our herd of cattle....

....or what a valuable piece of livestock she is but...

...unless we go the other way, perhaps applying our policies on LivestocktoCattleand Cattle to Betsy, we can expect a courteous and politically correct conversation but CANNOT ADD DECISION VALUE on what to do about Betsy.

"It's time that we move from good words to good works, from sound bites to sound solutions"

"It's irresponsible to question the science of climate change"

Abstraction layering (implemented as indirection) has driven Software development productivity to grow exponentially by allowing us to label and manipulate "cumulatively all that went before". But even in this virtual world, constructs of the mind have limitations.

Good stuff, BUT going lower often makes conversations more confrontational, especially when stakes are high. My second takeaway is that it is ALWAYS helpful to rebuild trust by moving up the abstraction ladder. Stating COMMON GOALS AND DESIRES rebuilds confidence that we're still on the same team. This leadership trait is demonstrated spectacularly in Apollo 13 by Jim Lovell when the crew is getting frayed from rapid-fire life and death decisions...

"We are not in the watchmaking business, we are in the true luxury business."

- Yves Piaget

When I ask many young CEO's and marketing people "Who's your competition and why are you better?" they answer with a list of both strengths and the competitors' longer list of weaknesses. In addition, they rarely include the big competitor which is the customer's status quo.

Here's how to think strategically about competition.

HIGHLIGHTING A COMPETITOR'S WEAKNESSES RARELY WORKS

Today's customer's are more informed of competitor's strengths and weaknesses (especially if they are already using the products)

Marketing (marcom in particular) is communicating about your product and company things that customers believe are true n'est pas? Therefore, understanding how customers recognize truth is a pre-cursor to believable communications.

I've found three groups of people who've worked "truth" really hard. Religious, philosophers and mathematicians. Apparently there are ..... 9, NINE, IX, 8+1 ..... different theories your customer (assuming they're people) might use to decide whether your statements are true! Here they are:

1) Coherence - fits within a whole

2) CORRESPONDENCE - proved by evidence or individual opinion in a similar context

6) Pluralist - "property" of a statement which makes a proposition true

7) DEFLATIONARY - assertions of truth don't mean anything, they're a tool of discourse to emphasize claims or form generalizations (also called Minimalist)

8) Redundancy - asserting something is true is the same as asserting the real thing

9) EPISTEMIC - notion of truth is epistemic (all of the above)

Whew...there you go. Now we know what to do.

If it helps, mathematicians thought they were on the most solid ground before Godel's incompleteness theorems http://goo.gl/Z50liu now they'd rather not talk about it.

Wait there's more ... "according to a survey of professional philosophers in November 2009 (taken by 3226 respondents, including 1803 philosophy faculty members and 829 philosophy graduate students) 44.9% of respondents accept or lean towards CORRESPONDENCE theories, 20.7% accept or lean towards DEFLATIONARY theories and 13.8% EPISTEMIC theories." (I'm not sure what happened to the other 20.6% maybe they told them to buzz off).

There's been lots of activity on LinkedIn groups discussing the role of Business Development or BizDev. I found it interesting since I've occupied this slot and hired/promoted people into the slot.

This is a title that is being used to describe many roles now, including:

Inside Sales

Territory Sales

All or part of Marketing Product Management

Social Media content management

and others...

What surprises me is people in the first decade of their career with the title. I am schooled that BizDev is bolted to the CEO or division level executive leadership and working 3-10 years out. Self-driving cars, contact lenses and fiber to the home is BizDev for Google.

What are you going to do when your market saturates? All products, markets and industries mature and create challenges for the leadership. I believe the role should be led by people after accomplishments in Marketing/Sales and General Management with solid foundations in finance and some law. They should be able to sell stakeholders on how taking an "out of bounds" risk makes sense and be able to manage an acquisition or divestiture.

It is sometimes a convenient title for founders if the company grows up around them. This is fine if they grow into the role. Don't mistake a practical people decision with the strategic role longer term.

Worst case I see the title sometimes being used to avoid using "sales" in someones title, the dead giveaway here is when the title is assigned with 1 year sales metrics.

Old engineers remember the Digital Equipment Corporations' VAX 11/780 computer. The Vax 11/780 was the "benchmark" unit of computing (1 MIP) in the engineering world of the 1980's. Competitors had to compare their performance to the VAX 11/780. It was the machine Unix grew up on. http://en.wikipedia.org/wiki/VAX-11

I think the iPhone 4s became the first "benchmark" of pocket computers (i.e. smartphones). It hit the "sweet spot" of cost/performance running a general purpose dual core iOS 5.0 (shared with iPods) with a MAC look and feel and properly virtualized i/o. http://en.wikipedia.org/wiki/IPhone_4S

Apple is way out-thinking Wall Street as they move down market. "Talking-heads" at Bloomberg, NBC, and securities analysts have argued they need cheaper phones to stem the market share growth of Android. Apple has kept it's cool and devised the best of all compromising strategies... BOTH.

Both a) more affordable phones and b) maintaining revenue and margins for the premium product/ecosystem. They did this by taking a strategy lesson from BMW and Mercedes. Enter lower price markets by selling used phones at Android pricing, and replace the high-end with enhanced functionality (i.e. AC7). Would you rather have a used BMW 3 series or a Ford Focus?

Steve Jobs long ago recognized how to use Moore's law to fill out product portfolios. Rather than designing high, medium and low end products, he would ride Moore's law cost reductions to sell yesterday's functionality at lower prices. The Apple software and manufacturing ecosystem rides along for free. Once customer loyalty is captured, it is easier to up-market sell the high end. Engineered cost-reductions can focus on the most bang for the buck products.

Now Apple's marketing strategists have convinced the organization to recycle 4, 4s and 5 phones by providing trade-ins. It extracts the residual value of Apple phones into Apple's pocket, helps the high and low-end customer, and is ecological to boot.

This is an example of a key idea in good strategy. Good strategy increases efficiency somewhere in the value chain. In Apple's case it is extracting value from the oligopolistic carrier distribution channels by leveraging it's stores. Retail became a necessary evil when telcos had to sell phones to people (mobile) instead of buildings (landline). Apple uses retail to build customer relationships (genius bars) not an every 2-year visit to re-new a contract.

Apple knows these machines are "pocket computers" first and phones second 🙂